Why George Osborne’s cuts will widen inequality

The countries with the biggest cuts also suffered the largest increases in inequality.

Rarely a week goes by without George Osborne proclaiming that the coalition's cuts are "progressive", but past experience suggests that they will trigger a huge increase in inequality.

The graphic below, from today's Financial Times, shows that the countries with the biggest deficit reductions (Canada, Finland, Netherlands, Sweden) also suffered the largest increases in inequality. Nick Clegg may have promised that there will be no return to "sink-or-swim economics", but since the poor are disproportionately reliant on public services, they will be hit hardest by cuts.

As the second graph shows, while public services represent 62 per cent of disposable income for the poorest fifth, they represent just 8 per cent for the top fifth.

There's also a sober warning from the OECD's Herwig Immervoll, author of a study on the subject, that the comparatively small size of the UK's welfare state means that the rise in inequality is likely to be more severe. "Because there is already less public spending on some areas, there is a risk that it will crumble away more quickly," he says.

Olli Kangas, another expert on inequality, pointed out: "Sweden has a fat welfare state, Finland's is a bit slimmer, and in the UK it is thin.

"If the welfare state is losing weight it will have more impact in the UK than in Sweden and Finland."

The government's decision to opt for an unequal ratio of spending cuts to tax rises (Osborne currently envisages a 77:23 split) also means that the economic pain will be focused on the poor.

The coalition now has a choice. It can either abandon the regressive aspects of its deficit reduction programme, or it can, in true Thatcherite style, argue that the need to cut public spending trumps all social concerns. The current approach, of dressing regressive cuts up as "progressive", is intellectually and morally unsustainable.

Spending

George Eaton is political editor of the New Statesman.

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Quiz: Can you identify fake news?

The furore around "fake" news shows no sign of abating. Can you spot what's real and what's not?

Hillary Clinton has spoken out today to warn about the fake news epidemic sweeping the world. Clinton went as far as to say that "lives are at risk" from fake news, the day after Pope Francis compared reading fake news to eating poop. (Side note: with real news like that, who needs the fake stuff?)

The sweeping distrust in fake news has caused some confusion, however, as many are unsure about how to actually tell the reals and the fakes apart. Short from seeing whether the logo will scratch off and asking the man from the market where he got it from, how can you really identify fake news? Take our test to see whether you have all the answers.

 

 

In all seriousness, many claim that identifying fake news is a simple matter of checking the source and disbelieving anything "too good to be true". Unfortunately, however, fake news outlets post real stories too, and real news outlets often slip up and publish the fakes. Use fact-checking websites like Snopes to really get to the bottom of a story, and always do a quick Google before you share anything. 

Amelia Tait is a technology and digital culture writer at the New Statesman.